Hours worked by directors have jumped from 132 to 178 annually as boards respond to fast-moving economic pressures, the latest "Directors’ Fees Report" shows.
The report, produced by the Institute of Directors in associate with EY, brought together data for 4077 directorships held by 1148 directors across 1752 organisations.
The median fee for non-executive directors fell from $52,000 in 2023 ($51,529 in 2022) to $50,000 in 2024, influenced by an increase in the number of survey respondents in low-remuneration or pro-bono positions.
In a statement, IoD general manager of learning and engagement Dr Michael Fraser said both pressure on fees and increasing demands on time were familiar territory for directors. This was the second consecutive year the number one reason for turning down a governance role was the time commitment.
"There is certainly a feeling in the governance community that organisations need more support from their boards than in the past.
"Economic uncertainty, global volatility, regulatory complexity and increasing expectations from shareholders and stakeholders make the current operating environment extremely challenging," he said.
Dr Fraser highlighted current New Zealand economic conditions, uncertainty around the disruptive influence of new technologies such as AI, and increasing requirements to consider aspects not previously accounted for, such as climate, as key challenges for boards.
"When you add to that geopolitical uncertainty and legal risk that can, in some circumstances, become a personal liability for directors, even the most experienced are having to constantly scan the horizon and ask, how can I add more value to my organisations, what else can I do to support management, and how can my boards stay agile in a fast-changing world?
"While the idea that we are in a permacrisis is perhaps overused, this sustained increase in hours over the past few years is exactly what we saw during Covid-19. I suspect that board input is increasingly being sought by management to help smooth out short-term issues, they are not just the guardians of long-term strategy any more," he said.
The largest annual average fee industry movement, at 13.1% was within the mining industry, followed by construction at 12.8% and then retail trade at 11.7% .
Most directors (65%) reported being satisfied with their remuneration. Directors from companies listed on the NZX/ASX or other stock exchange were the most satisfied by their remuneration, overtaking directors from unlisted companies. In contrast, Crown entities reported a 0% satisfaction rate.
While there was an increase in female respondents, women were more likely to be in trustee or executive committee/council roles. The variance between fees for men and women had opened up again. Last year, there was a 7.1% gender gap at the median ($50,000 for female directors and $53,800 for males). This year, the gap has increased to 10% with the female median at $45,000 and the male median at $50,000.
The report said succession planning was becoming an issue for some prominent companies with a number of private and public sector boards announcing resignations and retirements of sometimes multiple board members at once, as well as the chief executive.
